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TIME FOR CHANGE

Turkey cannot accept growth below 5%

Interview - June 9, 2015

Following years of continuous growth, Economy Minister Nihat Zeybekci says Turkey cannot accept the recent slowdown and must aim high in order to reach its potential and become a top 10 economy by 2023. Describing the current parliamentary system as the ‘graveyard of political parties’, Mr. Zeybekci pledges his support for a new constitution and presidential system after the June 2015 elections.

TURKEY’S ECONOMY MINISTER NIHAT ZEYBEKCI
NIHAT ZEYBEKCI | TURKEY’S ECONOMY MINISTER

Turkey’s Vision 2023 includes ambitious targets for boosting the value of exports to $500 billion and increasing the volume of foreign trade to $1 trillion. How do you intend to achieve these ambitious goals?

First of all, Turkey has increased its exports considerably, with an average growth rate of 12.5% for the last 12 years. If this increase continues at the same level, we will reach $500 billion of exports. However, here I would like to underline that Turkey aims at reaching $150 billion in services revenues, which have already exceeded $50 billion. Moreover, when we look at the list of the top construction companies in the world, Turkey ranks second after China with respect to the numbers of firms, and the ninth with respect to the capital of the firms. We have a construction sector whose contracts have an average annual value of about $30 billion in total and we want Turkey to become a country with construction contracts worth $100 billion in total in 2023. Turkey has achieved success in an environment where other countries controlled the raw materials and energy resources, and determined the distribution and consumption channels.

We are all aware of what we need to do to achieve the targets of 2023. Only if the passive economy of Turkey turns into an active one can we achieve these goals. We should take measures to activate all the opportunities in this country.

Secondly, we have benefitted from the Customs Union with the EU and our cultural ties to Central Asia, the Caucasus, the Middle East, the Gulf, Northern Africa, and the Balkans. Turkey has a lot of advantages. Turkey is able to utilize its energy resources and raw materials in a sustainable manner.

Thirdly, I would like to focus on the chains of distribution. From a logistical perspective, Turkey has great advantages to enable it to control the chains of consumption and distribution.

Fourthly, we can be active and efficient in determining the consumption habits of our neighboring countries and sphere of influence. Moreover, we can go into partnerships with the sectors, firms, and countries in these countries. We can establish joint ventures. We can take action together and seek new opportunities.

In light of all these advantages, we can achieve our 2023 targets and take important steps towards being one of the top 10 economies in the world. Turkey can have the third biggest economy in Europe. Per capita income can exceed $25,000. We can have a $2 trillion economy. Our foreign trade volume can exceed $1 trillion. We are paving the way to achieve the 2023 targets through more than 1,200 action plans in 25 different sectors, as our former prime minister Ahmet Davutoğlu has explained.

However, considering the geography and the steps that need to be taken for an active Turkish economy, as I have mentioned earlier, we have to also note that the economic map of the world has been redrawn again with such organizations as the European Union, the Transatlantic Trade and Investment Partnership (TTIP), the Trans-Pacific Partnership (TPP), the Eurasian Customs Union, the Shanghai Five, the Caribbean Community, East African Community, and the West African Union. We closely follow all these organizations, structures and blocs and Turkey takes important steps in enhancing its position among these organizations by adopting the perspective of a liberal economy.

One of the ways Turkey is attempting to promote and raise the standards of its exports is through Turquality. Last year a new branding logo was unveiled for Turkish products with the slogan: “Discover the potential.”

How successful has Turquality been in its objectives to promote Turkish brands to date, and what should the world know about the quality and potential of Turkish products following the launch of the new branding campaign?

I would like to underline once again that Turkey should be more active in determining its consumption habits. We have significant potential and we are in a very beneficial geographic location. The Turkish private sector had some serious concerns when the Customs Union agreement was signed with the EU in 1996. We were worried and anxious about whether we could compete with the firms, brands and the large chains of distribution in the European Union. Nineteen years have passed since then and we now know that these concerns were, in fact, irrational. Nowadays, about 40% of the total imports and exports of Turkey are realized with the European Union and 40% of the total foreign trade volume is with the bloc. Some 72% of foreign direct investment comes from the EU also. Therefore, Turkey has succeeded in many respects. But as I mentioned before, we should take steps to form our own brand.

Turkey is promoting its products all over the world thanks to Turquality. We now have the “Discover the potential” branding slogan. What lies behind the slogan? The answer is that we want to shape the perception of Turkey held by those who have good or bad grace, those who inadvertently like or dislike Turkey. Turkey is a country still proud of its history and the past. However, no explicit picture of Turkey has been drawn. That’s why it is difficult for many to figure out what Turkey is.

We have to paint a clear picture of Turkey and make Turkey unified. “Turkey, Discover the potential.” If you look carefully at this logo, the letters “t”, “u” and “k” in the word Turkey have symbols inside. They are emblems telling the world about our history, our pleasures, our culture, colors, and our future.

When you see these emblems and colors anywhere in the world, the first thing you remember should be Turkey. We have tried to do this. “Turkey, Discover the potential” is a very important step in this respect. This is all the same for Turquality. Many countries have a strong brand. The most typical example of this is the U.S.A. You can see the American flag in practically every American movie. You are sure to see the American Congress building and the White House. You can also see a courthouse and a court scene in every movie. All these give a message: America, flag, congress, democracy and justice, etc. They try to give an impression that these are the American values. Moreover, if you come across a building, a flag, or the colors of the American flag, you remember subconsciously that they belong to America.

What we are trying to do is to make a Turkey brand which will help create a positive impression about Turkish firms and products in the commercial and industrial sector. This is a step to use the same logo and the same colors in every field from iron and steel, to tourism, health, science, publishing and cinema.

In the late 1990s Turkey was attracting almost no foreign investment, but it has attracted some $150 billion in FDI over the past 10 years. What are the competitive advantages of Turkey that make it standout as an appealing destination for FDI, and how important is FDI to Turkey’s target of average yearly growth of at least 5%?

First of all, I want to make a comment about the figures you have mentioned. In its progress towards 2023 objectives, Turkey cannot accept a growth rate under 5%. Turkey’s growth rate should always be above 5%. Turkey inherently has all the conditions necessary to ensure growth above 5%. We have a very young and dynamic population. The level of education in Turkey increases rapidly each year. Moreover, Turkey is a very rich country in terms of natural resources.

Logistics, location and thus geography are among the most important aspects. Turkey is at the center of a very important region close to all channels in terms of energy, raw materials, and population. There is only one thing missing. The capital ratios in Turkey are not high and this leads to very low savings ratios.

Today, China has achieved a savings ratio of 50%. In India, the saving ratio is 30-40% and the average of the European Union is nearly 30%. In such an atmosphere, the saving ratio in Turkey is unfortunately 15%. In other words, we can only save 15% of our national income.

Therefore, we need capital. We should attract the capital of countries with high savings ratios. We have taken the necessary steps, in this regard. We have achieved success in improving the investment atmosphere in Turkey, and making Turkey a point of attraction for investments by offering more advantages than other countries.

Up to the end of 2002, total foreign direct investment in Turkey was below $15 billion. However, after 2003, Turkey has attracted an additional $150 billion of foreign direct investment. Of course, this is not sufficient. Considering Turkey’s potential, and the total foreign direct investment potential worldwide, this figure is not enough for Turkey.

We should swiftly increase this figure above $20 billion annually, up to $25 billion. If we can attract these amounts of foreign direct investment on a yearly basis, we can easily achieve the targeted growth rates. To that end, we are making and will make important arrangements. I hope that based on these arrangements, the conditions in Turkey will be more convenient in terms of democracy and politics. Moreover, predictability of the investment atmosphere will also increase.

Journalists and commentators, particularly in Europe, struggle to put an accurate label on the AK Parti. You have been with the party for over a decade, first in local politics and then as an MP and minister. How would you define identity of the AKP and how do you think it should be perceived by external observers?

When the AK Parti was established in 14 August 2001, there were many speculations about the party. At that time, the perception in Turkey was that, just like other newly established parties, the AK Parti would not have a long life, and the leader of the party was not qualified to become a leader a prime minister, or even a mukhtar.

When we embarked on this process in Turkey, we changed many things. We argued that Turkey had always had a state-oriented structure. The state had always dominated over the nation. The state was considered as blessed. Moreover, it was perceived that the sacrifice of a nation for the state was a blessed task.

Rather than a dominant or ruling state, we believe in a state that serves its citizens. We started off based on this understanding. We have always prioritized the nation and we think that it is blessed to serve the nation. We achieved success, in this regard.

Of course, this has not been easy. Some may think that we achieved this stage very fast without any effort. But we faced the strong resistance of the bureaucracy and all other institutions in Turkey. Within six or seven years, there were court cases against the ruling AK Parti. The justifications of these trials were far from democratic and also inconsistent with human rights. These are all now over.

Today, Turkey has to follow a different path politically.

Now in Turkey, the president has been elected by the nation itself. Moreover, the president now also has a voice in the administration and practices of government. In the second such presidential elections, after five years, in 2019, the public will question whether the president has done his tasks well, and governed the state properly or not. If not, the president cannot ask for their vote again.

Now, it is time for Turkey to eliminate the current obstacles against democracy, representation and justice such as the parliamentarian system. There are many successful examples worldwide, in this regard. Looking at the political parties in the UK, America, Germany and Japan, we believe that Turkey should not have a democracy which is a graveyard of political parties.

We consider that Turkey together with the AK Parti and other political parties has put its democracy on the right track. We may still have some deficiencies, but I believe that we can overcome them in a short while. In this respect, the elections in June 2015 are among the most important elections in Turkish history. The current constitution of Turkey is not suitable for the future of Turkey. It does not comply with the development, growth or progress of democracy in Turkey. I hope that Turkey will welcome a new constitution following the elections.

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